Association In Loan Missouri Savings
FHA loans are once again gaining popularity due to a variety of reasons. Their market share dropped significantly during the period from 2000 to 2007 due to the surge in popularity of sub-prime loans and loans that allowed zero down payment. However the recent sub-prime crisis and the flurry of foreclosures led to most of the lenders tightening the mortgage requirements. FHA loans are once again becoming a viable option for low-to-middle income families for acquiring home loans. The recent bridge loan for the $8000 tax credit which is limited to FHA loans may well be another boost for the popularity of FHA loans.
How FHA Loans Work
The FHA loans are available to purchase or refinance a principal residence. Federal Housing Administration(FHA), which is a part of HUD do not fund a loan, instead they insure the loan. The mortgage loan is funded by a lending institution, such as a mortgage company, bank or savings and loan association.
Borrowers are required to pay a small upfront mortgage insurance premium(1.5% of the purchase price) and a small monthly mortgage insurance (MMI) premium.
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